The impact of state ownership, formal institutions and resource seeking on acquirers’ returns of Chinese M&A

The impact of state ownership, formal institutions and resource seeking on acquirers’ returns...
Du, Min; Boateng, Agyenim; Newton, David
2015-02-04 00:00:00
We examine the effects of state ownership, institutions and resource-seeking behavior on post-acquisition stock price returns of Chinese cross-border mergers and acquisitions over the period 1998–2008. Chinese acquiring firms experience negative returns ranging from 2.92 to 10.80 % in 12- and 60-month post-event periods, respectively. State ownership (SOE), interaction between R&D and SOE, formal institutional distance and acquirer size have a positive and significant impact on the long-term acquirer returns. However, the interaction between tangible resources and SOE and acquirer cash holdings appears to have a negative and significant impact on long-term returns. Overall, our results suggest that the state and institutions constitute important sources of long-term value creation for Chinese acquirers.
http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.pngReview of Quantitative Finance and AccountingSpringer Journalshttp://www.deepdyve.com/lp/springer-journals/the-impact-of-state-ownership-formal-institutions-and-resource-seeking-CW8c8hiE1S

The impact of state ownership, formal institutions and resource seeking on acquirers’ returns of Chinese M&A

Abstract

We examine the effects of state ownership, institutions and resource-seeking behavior on post-acquisition stock price returns of Chinese cross-border mergers and acquisitions over the period 1998–2008. Chinese acquiring firms experience negative returns ranging from 2.92 to 10.80 % in 12- and 60-month post-event periods, respectively. State ownership (SOE), interaction between R&D and SOE, formal institutional distance and acquirer size have a positive and significant impact on the long-term acquirer returns. However, the interaction between tangible resources and SOE and acquirer cash holdings appears to have a negative and significant impact on long-term returns. Overall, our results suggest that the state and institutions constitute important sources of long-term value creation for Chinese acquirers.

Journal

Review of Quantitative Finance and Accounting
– Springer Journals

Published: Feb 4, 2015

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